A BUMPY START
On Valentine's Day, the Internal Revenue Service at last began processing many of the tax returns that had been delayed due to Congress' late-in-the-year tax legislation, though there were still some delays in processing non-1040 business tax returns. Due to the high volume of delayed returns, it asked some private sector e-filers to stagger their submissions, to avoid overwhelming the system.
It was all part of a relatively rough start to the tax season, which saw several snags for preparers (see our Tax Season Update on page 1), and also for vendors: Intuit reported that the delays had negatively affected its second quarter revenue (though it still reported growth for the period).
CHANGES AT THE TOP
The Public Company Accounting Oversight Board named Helen A. Munter as the new director of its Division of Registration and Inspections, the board's largest operating division, which conducts periodic inspections of hundreds of registered public accounting firms. She succeeds George Diacont, who retired. Munter joined the board in 2004.
After fours years at the helm of McGladrey & Pullen, Dave Scudder will resign as managing partner effective April 30. The firm, which operates in an alternative practice structure with RSM McGladrey, has instituted a selection process for a successor, and Scudder will assist in the transition at least through June 30. Scudder informed the board of his decision to leave in mid-February. He joined M&P in 1986, and became a partner in 1995.
Robert Herz, the former chair of the Financial Accounting Standards Board, who retired unexpectedly last fall, has found a new job: senior advisor at WebFilings, a company that provides technology for Securities and Exchange Commission financial filings.
MORE ON TAXES
The Federal Deposit Insurance Corp. told Republic Bancorp, the main refund anticipation loan provider for Jackson Hewitt and Liberty Tax Services, that the bank's RALs are "unsafe and unsound" without a debt indicator from the IRS. The IRS has stopped providing the indicator, in what some see as part of concerted effort by the government to eliminate RALs.
The IRS has selected its 2011 Taxpayer Advocacy Panel members, naming 32 individuals to join some 70 returning members. For a full list go to IRS.gov.
The agency also released a number of revenue rulings and notices, including Rev. Rul. 2011-5, which raises the interest rates for the calendar quarter beginning April 1, 2011, by one percentage point; Rev. Rul. 2011-6, which provides various prescribed rates for federal income tax purposes; Notice 2011-12 on determining the income tax withholding on wages paid for services performed by nonresident alien employees; and Notice 2011-8, which makes adjustments to the limitation on housing expenses for purposes of Section 911 for specific locations.
Notice 2011-18 granted transitional relief from the penalties imposed by recent information reporting requirements that apply to stock issuers when an organizational action affects the basis of the stock (Section 6054B). The IRS will not impose penalties against issuers for missing the deadline to file a return or failing to make the return publicly available, provided they do so by Jan. 17, 2012.
Finally, the agency reversed its position on the deductibility of breast pumps as medical expenses, announcing that expenses for breast pumps and other supplies that assist lactation may be deducted as medical expenses or reimbursed under a flexible spending arrangement or similar plan.
The House Ways and Means Committee approved two separate pieces of legislation to repeal the onerous 1099 reporting provisions enacted in 2010 as part of the health care reform act, with Republicans and Democrats sharply divided over how the bill would be paid. Meanwhile in the Senate, lawmakers approved a bill that includes a provision that repeals the expanded 1099 requirements.
IN OTHER NEWS
Global business advisory firm FTI Consulting entered into negotiations with financially troubled tax and consulting firm LECG to acquire several of its practice groups. West Palm Beach, Fla.-based FTI said that it was not pursing an acquisition of the entire firm.LECG, which had previously acquired Smart & Associates, a Top 100 Firm in the Delaware Valley, has been squeezed by a cash crunch.
Big Four Firm Deloitte has been called in to consult on the public schools budget of Washington, D.C., which is facing a deficit of roughly $600 million. The firm will undertake the engagement pro bono, looking for savings and additional monies.
Nearly three quarters of U.S. nonprofit organizations are concerned that tax exemptions will be revoked in the next year or two, according to a survey by Sage North America. The poll found that 74 percent of the 602 organizations surveyed said that they are very or somewhat concerned that some tax exemptions for nonprofits will be revoked in the next one or two years.
Lending to small firms by U.S. financial institutions continued to decline, but began to stabilize in some categories over the 2009-2010 period, according to a new study by the Small Business Administration.
CORRECTION
The Ernst & Young Discover Tax conference described in "Tomorrow's News" (February 2011, page 38) is in its fifth year, not its fourth, as originally stated. Our apologies for the error.
